BlackRock Inc. manages more than $4 billion in funds for the biggest public pension in Texas, undercutting claims by Republican Governor Greg Abbott that the state has cut ties with the world’s largest asset manager because of its advocacy of sustainable investing.
The Teacher Retirement System of Texas sold all its shares in BlackRock by the end of 2022 to comply with a state law that prohibits government entities from directly investing in finance firms that are deemed to “boycott” the fossil fuel industry. However, the TRS still uses BlackRock to manage about $4 billion of its assets — or about 2.2% of the $179.7 billion total — according to documents obtained by Bloomberg News under public records laws.
The governor’s office didn’t reply to a request for comment. BlackRock declined to comment. TRS said it’s following state law about divestments.
BlackRock’s hold on Texas assets highlights the limits of the state law that took effect last year targeting investment companies and funds that eschew business with the oil and gas industry. The focus on BlackRock and other financial firms is part of a broader push in Texas, Florida and other GOP-controlled states to curb so-called ESG investing, which takes into account environmental, social and governance issues that tend to overlap with Democrats’ priorities.
BlackRock and its chief executive officer, Larry Fink, have been at the center of the crusade against Wall Street and firms that commit to climate goals. Texas Republicans are incensed at the statements Fink has made about transitioning away from fossil fuels, and say that his investment policies are motivated by politics instead of what’s best for account holders.
For their part, BlackRock and other money managers say that the ESG offerings are in response to demand from clients. BlackRock has also emphasized over the last year that it is one of the world’s largest investors in energy firms, including in Texas.
BlackRock manages $2.6 billion in public-market funds for the TRS and $1.4 billion in private-market funds as of Feb. 6, according to documents provided by the pension manager. TRS also pays BlackRock about $1 million a year for analytics and risk-management systems.
The Texas law seeking to protect the oil and gas industry — called Senate Bill 13 — requires that the state avoid direct investments in the finance firms and funds with ESG elements. It doesn’t limit holdings for external fund managers, and also contains an exemption that allows pensions to avoid divesting from holdings if such a move would be inconsistent with their fiduciary duty.
Read more: Texas Enforcer Holds Key to Wall Street’s Access to $330 Billion
In Florida, the state treasury said in December it plans to pull $2 billion of assets managed by BlackRock, but the firm still managed about $13 billion in retirement funds as of late January.
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